Chapter 1 Introduction to Operations Management
Introduction
Operations Management = the planning and organizing of the production of manufactured goods
and delivery of services / management of processes that convert inputs (such as materials, labour
and energy) into outputs (in the form of goods and services)
Before it was production management = tended to focus on the internal activities of the firm
and was preoccupied with how best to organize equipment, employees and work within the
factory setting
Core processes in OM
Order fulfillment process
Customer relation process
Supplier relation process
Product and service development process
--> company type is very important: and how about hierarchy, centralization, the extent of
formalization and the level of complexity (in other words the organizational design)
What is the nature of operations in an organization?
Organization = when two or more people come together in order to perform an activity
Four basic issues that need to addressed in relation to organizational design: (1) nature of hierarchy,
(2) degree of centralization, (3) extent of formalization, (4) level of complexity
6 organizational forms:
1. Simple (small and medium sized enterprise (SMEs), entrepreneur is owner)
2. Functional (think of Operations, Marketing, HRM etc.)
3. Divisional (Think of product categories, customer markets, regions of the world)
4. Conglomerate (think of different businesses into one)
5. Hybrid (mix of several organizational forms)
6. Virtual (exists largely online and their customers are also a significant portion of their
‘workers’)
How is the operations function organized?
System = clearly identifiable, regularly interacting, or interrelating groups of activities
Simultaneous multiple containment (SMC) = many systems are interrelated and made up of
subsystems and are themselves subsystems of a larger system
The relationship of OM with other management functions
Despite organizational charts showing functions as separate entities, a key aspect of any organization
is the ability to ensure collaboration across the different functional areas
What does an Operations Manager do?
- Developing and maintaining the system’s infrastructure
- Managing the system inputs and distribution of outputs
- Controlling material inputs within the system
- Managing customer inputs within the system (i.e. as ‘co-workers)
- Managing the rate of flow through the system
- Assuring the quality of system outputs
- Developing and enhancing the system’s processes
- Designing and developing human work systems
Introduction
Operations Management = the planning and organizing of the production of manufactured goods
and delivery of services / management of processes that convert inputs (such as materials, labour
and energy) into outputs (in the form of goods and services)
Before it was production management = tended to focus on the internal activities of the firm
and was preoccupied with how best to organize equipment, employees and work within the
factory setting
Core processes in OM
Order fulfillment process
Customer relation process
Supplier relation process
Product and service development process
--> company type is very important: and how about hierarchy, centralization, the extent of
formalization and the level of complexity (in other words the organizational design)
What is the nature of operations in an organization?
Organization = when two or more people come together in order to perform an activity
Four basic issues that need to addressed in relation to organizational design: (1) nature of hierarchy,
(2) degree of centralization, (3) extent of formalization, (4) level of complexity
6 organizational forms:
1. Simple (small and medium sized enterprise (SMEs), entrepreneur is owner)
2. Functional (think of Operations, Marketing, HRM etc.)
3. Divisional (Think of product categories, customer markets, regions of the world)
4. Conglomerate (think of different businesses into one)
5. Hybrid (mix of several organizational forms)
6. Virtual (exists largely online and their customers are also a significant portion of their
‘workers’)
How is the operations function organized?
System = clearly identifiable, regularly interacting, or interrelating groups of activities
Simultaneous multiple containment (SMC) = many systems are interrelated and made up of
subsystems and are themselves subsystems of a larger system
The relationship of OM with other management functions
Despite organizational charts showing functions as separate entities, a key aspect of any organization
is the ability to ensure collaboration across the different functional areas
What does an Operations Manager do?
- Developing and maintaining the system’s infrastructure
- Managing the system inputs and distribution of outputs
- Controlling material inputs within the system
- Managing customer inputs within the system (i.e. as ‘co-workers)
- Managing the rate of flow through the system
- Assuring the quality of system outputs
- Developing and enhancing the system’s processes
- Designing and developing human work systems
